Federal Reserve Official: Sandy Damage Worse Than Expected

William Dudley, president of the Federal Reserve Bank of New York, speaks at the Council on Foreign Relations earlier this year.

The damage from superstorm Sandy looks more extensive and longer lasting than initially anticipated, a Federal Reserve official said Thursday.

Federal Reserve Bank of New York President William Dudley, in remarks made at Pace University, said it was difficult to put a number on the cost of disruption to economic activity in the region. But he noted that increases in jobless claims in New York and New Jersey in the week after the storm hit, coupled with recent Fed data indicating that manufacturing firms in the city had shut down in the storm’s aftermath, indicate it could be substantial.

“A considerably part of this lost activity will be offset over time or be replaced by a temporary shift of activity from hard-hit areas to less-affected places,” Dudley said. “But, in a services-based economy, much activity cannot be shifted in time.”

Restaurants, in particular, would not be able to make up for lost business, he said.

But he expects reconstruction spending to stimulate local economies. “Putting all the factors together, at present I expect that economic activity in our region was adversely affected in October and November, but will show a noticeable rebound starting in December,” he said.